Chapter 12: E-Commerce Strategies for Business Markets PowerPoint by:

Chapter 12: E-Commerce Strategies for Business Markets PowerPoint by: Ray A. DeCormier, Ph.D. Central Ct. State U.

E-Commerce Defined E-commerce involves business communications and transmissions over networks and through computers specifically for the purpose of buying and selling products and services, and transferring funds through digital communications.

Internet Applications Successful Web sites: 1. Provide customers with information 2. Are interactive a. Offer online catalogs b. Process fulfillment c. Process payment d. Provide interactive communications through chat/video applications e. Provide a FAQ to address questions f. Provide customer service at less cost g. Allow customization of service & product offerings

E-Commerce Types Business-to-Customer E-Commerce 1. 2. 3. 4. 5. E-commerce can play pivotal role across all functional business areas. Product Information Sales Service Payment Marketing Research Intra-Organizational E-Commerce 1. Workgroup Communications 2. Electronic Publishing 3. Sales Force Productivity Inter-Organizational E-Commerce 1. 2. 3. 4. 5. Supplier Management Inventory Management Distribution Management Channel Management Payment Management

According to Porter Companies will not be able to survive without Internet applications but will not gain a competitive advantage from them either. It is traditional strengths such as – Unique products – Proprietary content – Superior product and product knowledge – Strong service & relationships that will determine the success or failure of a business.

Enhanced Customer Focus Means: Align with customers on: 1.Order management 2.Product configuration 3.Design configuration 4.Tailor products to meet exact requirements in real time 5.Any other ways?

Reduce Transaction Costs The Internet allows low-cost access to: a. b. c. d. e. Order entry Order tracking 24/7 service Self-service product information search Repair manuals and programs

Integrated Supply Chain Internet allows suppliers and vendors from all over the world to integrate into the production-marketing process to make it appear seamless. The key to effective supply-chain operations is the sharing of the: 1. Forecast 2. Production plans 3. Delivery schedules 4. Inventory tracking 5. Determination of inventory levels at all points 6. Actual-to-planned activity in real time

Crafting an E-Commerce Strategy Developing a B2B strategy for e-commerce is no different than developing a strategy for any other marketing activity. Start by evaluating the company’s 1. Products 2. Customers 3. Competitive situation 4. Resources 5. Operations and understand how all these elements mesh within an e-commerce strategy.

Questions to Guide E-Commerce Strategy Formulation

AIDA The Web can create: Attention Interest Desire Action

Creates Interest & Action The Internet can work as an effective tool, providing information as well as stimulating customer action--as demonstrated by this Web site.

Common Objectives 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Target specific groups Build recognition of company name / brand Convey a cutting edge image Conduct marketing research Interact with customers Provide real-time information Sell products and services Advertise in the new medium Generate leads Provide a medium for customer service Build strong relationships with customers and vendors

Implementing Internet Strategies Once Internet objectives have been defined, the marketing strategists needs to address its Web site in terms of: Product Presentation Pricing Distribution Promotion: Web Design

Successful Web Sites The heart of a successful e-commerce strategy is to develop an interesting and effective company Web site. The site should be easy for the customer to: Navigate Find product information Purchase (if appropriate) Meet service needs

Successful Web Sites Should be: Secure Fast Logical Should include: Internet catalog Search capability Auction or reverse auction abilities Contact tabs to include e-mail, telephone numbers, addresses, fax numbers, etc. Links to other related sites Just to name a few

Reverse Auction (RA) A reverse auction is one buyer and many sellers Buyer gets sellers to bid down the contract The pressure facilitates competition and keeps prices low It is effective when the sellers are qualified or preferred vendors RAs can result in damaging buyer/seller relations RAs could force suppliers to consolidate thus increasing their power over sellers

Private Exchanges Are a new form of reverse auctions whereby: – They are “invitation only” networks that connect a single company to its vendors, customers or both – They provide a secure, one-on-one communication – They enhance shared supply chain processes Inventory management Production planning Order fulfillment

Channel Considerations The Internet is a channel too, and as a result it can compete with a marketer’s other channels. To reduce conflict, marketers needs to consider its effect on: – – – – – Channel efficiencies Current market intermediaries Information sharing among channel members Ability to deliver product rapidly The outsourcing of key channel functions

Disintermediation Is: The process of reducing the number of traditional intermediaries through better connectivity between and among contributing firms because of the Internet. Travel agencies are on the wane due to the ability of airlines to do business online. The consumer can attain air flight tickets, hotel reservations and an automobile by simply clicking a few buttons. What other industries are affected that way?

Internet as a Channel The Internet is an effective channel for certain but: 1. Rarely do B2B marketers depend solely on the Internet to create business. 2. They employ salespeople to contact their customers and use the Internet to facilitate the exchange.

Internet is Exceptionally Effective for: 1. Remote marketing used to market software 2. Anything that can be digitized can be sold over the Internet such as: a. Software b. Movies c. Music d. Printing services

Digital Channel Advantages Can be customized to buyer’s needs Provides a wide referral source range such as search engines, Web pages, shopping agents, newsgroups, chat rooms, e-mail, etc. It’s always open for business

Internet’s Effect on Pricing The Internet allows buyers to quickly assess pricing, and this has bolstered buyers’ power. The Internet has increased worldwide competition (supply) while informing the market (demand). The net effect has been to lower prices. One result has been to make more products commodities. Thus the rise of the “Branded Commodity”

B2B Trends According to GlobalSpec Engineering Trends Survey: Engineering Professionals use the Internet: – – – – – – 91% 87% 72% 68% 64% 60% to find components and suppliers to find product specifications for news for research for pricing for technical application ideas The Internet is a powerful tool that can deliver information at critical points in the purchase decision process.